On Monday, President Trump announced via Truth Social that he would approve the sale of Nvidia (NVDA) H200 chips to certain companies in China and other countries.
The move is positive for Nvidia, which has been lobbying the government for months to approve the sale of more powerful chips to the country.
But the response from investors and Wall Street more broadly has been rather lukewarm. That’s because, as Gene Munster, managing partner at Deepwater Asset Management, said, it all feels a bit familiar.
In April this year, the United States banned the sale of Nvidia’s H20 chips to China, then approved processor exports in July. But instead of buying them, China has balked, claiming the chips could pose a security risk to local companies. The move is widely seen as an effort to push the Trump administration to allow Nvidia and its competitors to ship newer, non-downgraded chips.
And there’s no guarantee the country won’t do the same thing trying to get Nvidia’s current top-of-the-line system – the H200, which is two generations behind the current Blackwell-based B300.
Nvidia CEO Jensen Huang demonstrates the Grace Blackwell NVLink72 during a keynote address at the Consumer Electronics Show (CES) on January 6, 2025 in Las Vegas, Nevada. (Patrick T. Fallon/AFP) ·PATRICK T. FALLON via Getty Images
Likewise, it is unclear whether the United States will stop selling chips as a means of retaliating against China if ongoing trade talks between the two countries run into trouble.
“even though [an agreement gets] “Obviously this is a bargain and it’s probably going to be closed very quickly,” Munster explained.
“It’s like investing 101 … you want to get a good night’s sleep at night. And this is the exact opposite. You’re checking the time every hour here because you don’t know if we’re going to be on or off again.”
There’s also the question of whether lawmakers will try to block shipments of the H200 and other high-end chips. Critics have long argued that China could use U.S. chips to train artificial intelligence systems for military purposes.
From a financial perspective, returning to China is well worth it for Nvidia. CEO Jen-Hsun Huang said China’s potential market totals about $50 billion.
These forecasts are based on the company’s reduced chip count. More powerful GPUs could capture a larger share of AI sales. The only downside to Nvidia? Trump said the artificial intelligence giant and its rivals must pay the government a 25% discount on chips sold to China. That’s higher than Trump’s original plan of 15%.
Still, even with a 25% cut, sales to China will still benefit Nvidia.
NVIDIA CEO Jensen Huang delivered a speech at the Washington Convention Center on Tuesday, October 28, 2025, describing how AI infrastructure and AI factories that generate intelligence at scale are driving a new industrial revolution. (AP Photo/Manuel Balce Seneta) ·Associated Press
“They’re starting from zero at this point, so anything above zero is positive,” Bob O’Donnell, founder and principal analyst at TECHnaanalysis, told Yahoo Finance. “Selling any chip in any volume is an improvement.”
In addition to direct revenue, Nvidia will benefit from shipping its chips to China by getting more artificial intelligence researchers and developers to use its CUDA software platform, William Blair analyst Sebastien Naji wrote in a note to investors late Monday.
CUDA allows customers to take full advantage of Nvidia’s chips for a variety of AI processing needs, which also helps keep developers fascinated with Nvidia’s products. That could help offset growing competition from local Chinese chip companies, including Huawei, Najib wrote.
That’s all if China allows sales to go ahead. In his Truth Social post, Trump said Chinese President Xi Jinping had responded “positively” to news about the H200 chip, but there were still too many unknowns about whether sales would materialize and, if so, how long they would last.
Xi Jinping has been urging Chinese technology companies to use domestic chips for artificial intelligence needs to ensure they are not dependent on American technology. But experts say China’s chips still lag behind Nvidia’s latest and greatest chips in terms of performance.
“I’m just surprised that China is taking a positive stance on this because they’re just saying no…only use Chinese-made chips. And it looks like they’re really going to stick to that,” O’Donnell said.
“So it seems strange that they suddenly stopped sticking to it. So it’s a little bit confusing.”
Even if all goes well between the Trump administration and China, members of Congress may still seek to block shipments of chips to the country. Many lawmakers worry that selling advanced GPUs to China could help the country develop new, more powerful artificial intelligence algorithms that could give it a military advantage.
According to the Wall Street Journal, new chips destined for China must be shipped from Taiwan, where they are produced, to the United States for a national security review before being shipped to their final destination.
Still, it’s unclear whether that will be enough to win over wary lawmakers.
Ultimately, investors may not begin to determine Nvidia’s fate in China until several months after the first chips land there. If they are ever shipped.
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Email Daniel Howley at dhowley@technology shoutfinance.com. Follow him on Twitter: @DanielHowley.
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